The Indonesian economy in the second quarter is considered to be facing a number of quite serious challenges, both from abroad and within the country. Even a growth rate of 5% in the second three months of this year is estimated to be difficult to achieve.
This was conveyed by the Executive Director of the Institute for Development of Economics and Finance (Indef) Tauhid Ahmad when contacted. The domestic economy, he said, no longer has the momentum that can boost the economy like it did in the first quarter of 2024.
“In the first quarter, the growth came from public and government consumption, which was extraordinarily large. Because it was supported by the election and Ramadan,” he said when contacted, Monday (6/5).
This momentum, said Tauhid, was no longer found in the second quarter. Therefore, he estimates that public and government consumption, which has been the engine of growth in the first three months, will experience a downturn, aka weakening.
Not to mention that the volatile food or goods inflation conditions in the country are still quite high. In fact, this group is predicted to continue to experience increases in the second quarter due to climate change and world geopolitical conflicts.
Instead of being affordable, food needs are thought to limit growth in public consumption in the second quarter because there is the potential for price increases. Rice, for example, even though it has declined, the price of this commodity is not expected to fall any lower.
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This is because the government has set an increase in the Government Purchase Price (HPP) for grain and rice, at least until June 2024. According to Tauhid, this will not bring down the price of rice at the consumer level.
This condition might also become more severe because climate change is happening so quickly. As a result, rice production might be disrupted and increase the price of this commodity. “If you look at the projections, until April 2025 the price of rice will increase at world level, this is from trading economics, because of climate change and geopolitical situations,” he explained.
Food prices are also predicted to remain high due to the policies introduced by the new government. The free lunch and milk program is considered to cause demand for food commodities to skyrocket, causing prices to remain at high levels.
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This, said Tauhid, needs to be watched out for. The reason is that people’s income, especially the lower middle group, tends to stagnate. The majority of people will continue to rack their brains to just fulfill their stomach needs because high prices are not accompanied by an increase in income.
This situation will increasingly worsen the Indonesian economy, not only in the second quarter, but also in several subsequent periods. Moreover, the number of underemployed people has increased.
Referring to data from the Central Statistics Agency (BPS), there was an increase in the number of underemployed people by 2.5 million people in February 2024 to 12.11 million people. This means that more and more people have inadequate income or cannot meet their needs.
This is because people who are underemployed are those who work less than 35 hours a week and are still looking for or accepting additional work. “If you are still looking for work, it means that the level of income you receive is still not sufficient,” said Tauhid.
“They still work, but they work less than 35 hours and are looking for work, I think it’s because their income is less than adequate,” he continued. (Z-6)
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